What role do comparison websites have in commercial finance?
It seems there’s a price comparison website for everything these days, and nowhere is this more true than in the consumer finance market.
Turn on the TV and it won’t be long before you’ll be encouraged to visit a website or three to compare different insurance products – and receive a toy for doing so.
It’s a sign of how popular price comparison websites are currently – so much so that one well-known insurer makes a point of telling us they’re not on them – with the 2014 Stickyeyes Intelligence Report finding these sites dominate the online consumer finance search market.
And yet, in the commercial finance market, it’s a very different story. According to the British Business Bank, only 4% of businesses researched their funding options online last year, with 57% preferring instead to speak to their existing funding provider.
Our own research, conducted last September, had similar findings. While 50% of the business owners and finance directors we polled contact their current bank manager when searching for new funding, just 3% used a price comparison website. So why is it so different in the commercial arena?
A far wider picture
There’s no denying the obvious benefits to receiving a quick price comparison. At the very least it will provide an instant guideline to how much something might cost, with speed often of utmost importance for small business owners who are lacking the time to conduct in-depth research into a funding product.
Yet the truth is commercial finance facilities are so much more complex than a mortgage or home insurance. It can be nigh on impossible to compare the same product from two or three different funders like for like, with so much to consider. Yes, cost is important, but the facility’s structure, additional bolt-ons and the funder’s level of service are arguably more so.
And that’s only if you’re looking at the right product. If you’re in need of a cash flow boost, a temporary overdraft might seem the obvious place to turn, but there are so many other facilities available which might actually be more beneficial over the short, medium and long term. There’s an awful lot to consider.
What’s equally important to remember is that no two businesses will be the same, which means their funding requirements and circumstances will also differ. As a result, the information a price comparison website requires might not scratch the surface when it comes to gaining an understanding of the business which is completing the form, and most likely lead to the wrong products being presented.
So what’s the solution?
The obvious answer is time. Time to read around the benefits of the different products available; time to talk to a number of funders to closely analyse how their offerings align with your requirements; time to mull them over and ensure the one you’ve selected really offers the best choice.
But time is in short supply for business owners, and selecting the right funding facility is one of the most important decisions that must be made. Perhaps that’s why so many go to their existing bank manager, even though the range of solutions they can offer will be limited to their own portfolio.
Where an independent broker can help is by removing this time barrier entirely. By getting under the skin of a business to understand its precise funding requirements, the broker will then use its knowledge of the current commercial finance market to identify the most suitable options whilst you continue with your day-to-day job.
And with access to the funders’ key decision makers, a broker will put you in touch with the right people to speed the process along, giving you the confidence that your business’s interests are in the right hands.
Last week we published an article exploring what businesses should look for in a finance broker, to help businesses like yours in their search for funding. We hope you find it useful.
If you would like to discuss your funding requirements in detail and find out how we can help, please call 0800 9774833 or email email@example.com.